Through the recently published provisional Local Government Finance Settlement, the UK Government will provide £69 billion to councils across England.

As part of this, £3.7 billion will be made available to social care authorities through the settlement to support adult and children’s services. This includes £880 million for the Social Care Grant, which will support councils to deliver care for adults and children in their communities, helping to reduce pressure on the NHS.

This £3.7 billion for social care authorities comes on top of the £600 million of grant funding to support social care, which was announced by Chancellor of the Exchequer Rachel Reeves in the Autumn Budget 2024.

The provisional Local Government Finance Settlement comes as part of the Labour Party’s Plan for Change to “rebuild Britain”. According to the government, it is fixing the foundations of local government, fundamentally reforming how councils are funded to make better use of public money, overhauling the local audit system, and protecting local taxpayers from excessive council tax increases.

The provisional Local Government Finance Settlement will provide £69 billion for councils across the country, a real-terms increase of 3.5 percent from 2024-25. This includes a new emergency £600 million Recovery Grant, offering better value for money through the repurposing of grants to help support councils most in need and maximise every penny of public spending to ensure it delivers for working people.

No council will see a reduction in Core Spending Power. Places with a significant rural population will on average receive around a five percent increase in their Core Spending Power to ensure rural communities have the support they need.

The Labour Party is maintaining the previous government’s referendum threshold for council tax, which will be maintained at three percent with two percent for the adult social care precept.

Alongside the provisional Local Government Finance Settlement, there has been an increase to the new Children’s Social Care Prevention Grant, which will be uplifted from £250 million to £263 million at the final Settlement early next year. The government says this lays the groundwork for wider children’s social care reform.

Deputy Prime Minister, Angela Rayner said: “Local leaders are central to our mission to deliver change for hard-working people in every corner of the country through our Plan for Change, and I know our councils are doing everything they can to stay afloat and provide for their communities day in day out.

“We won’t take the easy option or shy away from the hard work needed to rebuild a more effective and efficient system. These kind of reforms won’t happen overnight, but we are determined to deliver fairer funding, ending postcode lotteries meaning everyone gets the support from public services they deserve.”

In conjunction with the £69 billion funding, the government will be giving the sector a say on how the government can fix the current funding system from 2026-27. By distributing public funding more fairly, based on an up-to-date assessment of need, the Labour Party says it can deliver better value for money for taxpayers so that councils across the country can deliver high-quality services. This consultation can be accessed online here.

Additionally, the government has published a strategy for overhauling local audit that sets out a range of measures for rebuilding the system, including the creation of the Local Audit Office. It says this will streamline, simplify, and bring the different functions in the current system together.

In response to the provisional Local Government Finance Settlement, Melanie Williams, President of the Association of Directors of Adult Social Services (ADASS), said: “While this additional funding is welcome, there remains a funding gap of over £1bn for adult social care to even standstill next year, which means councils won’t be able to fully meet people’s care and support needs.

“This means that fewer people will be able to draw on care and support to help them stay independent and well, such as transport to go shopping, a regular cooked meal or support for family carers.

“Limiting the number of people who can access adult social care creates a vicious cycle; too many people reach crisis point and end up in hospital unnecessarily because they aren’t receiving low level care at home, and they can’t leave hospital because there isn’t enough support to return home safely.

“To get people home from hospital quicker and prevent them from needing to go there in the first place, the Government must commit to a long-term, fully funded plan for social care, to make care at home and in the community the default option for everybody.”

Cllr Louise Gittins, Chair of the Local Government Association (LGA), has also weighed in on the settlement: “Extra funding for councils next year will help councils meet some – but not all – of the pressures they face in adult and children’s social care, homelessness prevention and support for children and young people with special educational needs and disabilities. Councils of all types will continue to struggle to balance the books next year with many having to increase council tax bills to bring in desperately needed funding but still being forced to make further cuts to services.

“It is good that the Government has provided details of how it will compensate councils for direct costs they will face through increases in employer national insurance contributions (ENICs). However, this falls short of the £637 million we have estimated it will cost councils next year.

“We have also warned that indirect ENICs cost increases, through commissioned providers, will cost councils up to an extra £1.13 billion next year. While we are pleased that councils will receive extra social care funding, which will help towards these indirect costs, we continue to worry about the impact the ENICs rise will have on the organisations that the sector relies on to deliver vital care and support, especially smaller charities and providers. As we have warned, alongside more than 100 organisations this week, this will exacerbate the already unsustainable pressures facing vital local services.

“Different councils will have contrasting views about the Government’s use of a different method to allocate some additional funding next year. It is vital that all views are considered, and the Government ensures all councils have adequate resources next year to provide the services their communities rely on every day and can meet growing and complex cost and demand pressures.

“Councils continue to face severe cost and demand pressures and the recently launched Spending Review will be critical to the future of our local services. It is good that the Government has committed to providing councils with multi-year settlements as part of that process, but it must include significant and sustained increases in overall funding for councils. However, this alone will not address the multiple issues with the way local services are funded and councils stand ready to work with the Government on creating an improved and a more sustainable future funding system that works for all of local government.”